Kentucky Employment Law Blog

Independent Contractors vs. Employees; the Sixth Circuit Analyzes the Issue

Whether a worker is an employee or an independent contractor is a threshold question with regard to overtime: employees have to be paid overtime and independent contractors do not. The Sixth Circuit uses what it calls the "economic reality" test to distinguish between employees and independent contractors; there is no bright-line test, only an amalgam of factors to consider and apply in varying factual scenarios. The recent case of Acosta v. Off Duty Police Services illustrates.

Off Duty Police Services (ODPS) offers private security and traffic control services in and around Louisville, Kentucky. A typical work day might consist of "sitting in a care with the lights flashing or directing traffic around a construction zone." Both active, sworn police officers and nonsworn individuals work for ODPS doing the same type things; the sworn police officers are paid more and many people had worked regularly for ODPS for over a decade.

When someone needed ODPS's services they would go through a scheduler, who, in turn, would contact workers who met the needed qualifications. The workers could either accept or reject the offer, but there was important evidence that anyone declining a job offer would be punished, which meant no offers would be forthcoming for a while, a practice referred to as being placed in "time out."

ODPS provided some gear and equipment, but the workers had to provide some of their own, an example being an ODPS-branded shirt, the cost of which was deducted from their pay. They had to provide their own police style vehicles, which cost the nonsworn workers from $3000 to $5000.

There was minimal supervision by ODPS. At the job site, the workers had to follow the customer's instructions and wear a uniform; they were subject to grooming restrictions which were enforced occasionally.

The workers were required to sign "independent contractor agreements" when they started working for ODPS; these agreements included noncompete provisions.

The district court ruled that the sworn police officers were independent contractors, while the nonsworn personnel were employees. The Sixth Circuit reversed as to the former and affirmed the latter.

The "economic reality" test applies six factors: 1) the permanency of the relationship between the parties; 2) the degree of skill required for rendering the services; 3) the worker's investment in equipment or materials for the task; 4) the worker's opportunity for profit or loss, depending on his skill; 5) the degree of the alleged employer's right to control the manner in which the work is performed; and, 6) whether the service rendered in an integral part of the alleged employer's business. We turn to these from the easiest to the most difficult.

1. Integral Part of the Business - this asks whether the worker is doing what is the company's business, or could the company function without the services the workers provide. Since ODPS was about and only about providing the services the workers provide, this "factor cuts heavily in favor of finding an employment relationship between ODPS and all its workers."
   
2. Degree of Skill Required - ODPS required only a four hour training session for its workers, a reality favoring "employee status for all of ODPS's workers."
   
3. Investment in Specialized Equipment - This factor compares the worker's and the company's total investments. The biggest cost to the workers was the police-style vehicles that the nonsworn individuals had to obtain, which cost about $3000 to $5000, an amount, as the district court found, paling in comparison to ODPS's annualized business expenses of around $200,000.
   
4.  Permanency of the Relationship - although intermittent, at least theoretically, many of the ODPS's workers worked only for it and many more had worked for it for well over a decade. The permanence factor favors employee status.
   
5. Opportunity for Profit or Loss - This considers whether the worker can get better at his job such that he can make more money doing it than someone else can. This weighed in favor of employee status, because "ODPS's jobs required limited skill, experience or initiative" and, in any event, the workers received a set hourly wage.
   
6. Right to Control the Work - This requires consideration of whether the company tells the worker how and when to do the job. The practice of punishing the worker (placing them in "time out"), the noncompete provision in the contracts and the dress and grooming policies tipped the analysis in favor of employee status for the nonsworn individuals but was in equipoise for the sworn workers.

Robert L. Abell
www.RobertAbellLaw.com

 

 

Wage Theft from Carwash Workers; The Little Guys Win One

Workers at New York City area car washes have recovered about $8.5 million in a wage theft case, the New York Times reports, A Multi-million Dollar Payoff at the Carwash.

A musical tribute:

Every now and then the little guys win one ... and Justice for All.

Robert L. Abell
www.RobertAbellLaw.com

Disability Discrimination Claim May Be Pursued under Equal Protection Clause, Sixth Circuit Rules

A claim founded on disability discrimination may be pursued as a denial of equal protection of the law and pleaded under 42 U.S.C. § 1983 the Sixth Circuit ruled recently in Bullington v. Bedford County, Tennessee. 

Kaleena Bullington worked for the county sheriff's department as a dispatcher for over 8 years but fell ill with Hodgkin's Lymphoma and the necessary chemotherapy had some debilitating side effects. She claimed that the county discriminated against her based on the disabilities caused by the cancer and related treatment.

Bullington pleaded a claim of disability discrimination under the Americans With Disabilities Act (ADA); she also pleaded that disability discrimination denied her equal protection of the laws guaranteed by the Fourteenth Amendment and made this claim under 42 U.S.C. § 1983.

The Sixth Circuit held that Bullington "may assert an Equal Protection claim for disability discrimination under § 1983." 

Judge Moore authored the Sixth Circuit's opinion and was joined by Judge Clay. Judge Kethledge, a recent contender for a Supreme Court appointment, concurred stating that "nothing in the text or structure of the ADA supports preclusion of a parallel constitutional claim. ... reason enough to hold that such a claim is not precluded." 

Understand that Bullington's Equal Protection claim for disability discrimination is an alternative to one made under the ADA but is not a good alternative for at least two reasons: (1) she would have to show that "there was no rational basis for the state action that treated her differently because of her disability," a proof requirement akin to showing that disability discrimination was the sole factor in the differential treatment as opposed to a substantial factor; and, (2) the state's duty to accommodate a disability under the Equal Protection clause is likely lesser than under the ADA. 

Robert L. Abell
www.RobertAbellLaw.com

 

Tender-Back Doctrine Inapplicable to Title VII and Pregnancy Discrimination Claims, Sixth Circuit Rules

The common law tender-back doctrine does not apply to Title VII and pregnancy discrimination claims the Sixth Circuit ruled recently in McClellan v. Midwest Machining Inc.

Jena McClellan had established herself pretty well as a telemarketer at Midwest Machining until she had to report that she was pregnant. Her supervisor commenced a litany of negative comments and, about three months later, she was fired. When McClellan was fired she was made to meet with the company president, Philip Allor, who, McClellan claimed, pressured her into signing an agreement releasing all her claim in exchange for $4,000.  McClellan did sign the agreement.

McClellan was paid the severance money and later filed a pregnancy and sex discrimination lawsuit. About three weeks after the suit was filed and before any answer was due, McClellan paid back the $4000 she'd been paid to release her claims. The district court allowed limited discovery  as to whether McClellan had entered the severance agreement knowingly and voluntarily. The corporation moved for summary judgment; although the district court observed that there were disputed issues of fact regarding whether McClellan had entered the agreement knowingly and voluntarily, it gave the corporation a summary judgment because McClellan didn't pay the $4000 back before she filed suit.

The "tender-back doctrine" is from contract law and holds that "contracts tainted by mistake, duress, or even fraud are voidable at the option of the innocent party" but "before the innocent party can elect avoidance, she must first tender back any benefits received under the contract." But if the innocent party fails to do so within a reasonable time of learning that she can rescind the contract, she ratifies the contract and makes in binding.

The Sixth Circuit reversed, explaining that "requiring recently-discharged employees to return their severance before they can bring claims under Title VII ... would serve only to protect malfeasant employers at the expense of employees' statutory protections at the very time that those employees are most economically vulnerable" and held that "the tender-back doctrine does not apply to claims" brought under Title VII.

Robert L. Abell
www.RobertAbellLaw.com

Is Proof of Discriminatory Animus Necessary for a Disability Discrimination Claim?

Does a plaintiff have to prove that an employer had a particular animus toward employees with disabilities to sustain a disability discrimination claim? "No" answered the Sixth Circuit in EEOC v Dolgencorp LLC. We discussed this case in an earlier post, Failure to Provide a Reasonable Accomodation is Direct Evidence of Disability Discrimination.

The company, Dollar General, fired Linda Atkins after it refused to consider her request for a reasonable accommodation -- keeping some orange juice near her work station to ward off any hypoglycemic emergency caused by her diabetes. A jury awarded Atkins $27,565 in back pay and $250,000 in compensatory damages.

One argument raised on appeal by Dollar General was that the verdict erred and "that the verdict cannot stand because Atkins never produced evidence of animus towards the disabled." This went nowhere:

the [Americans With Disabilities] Act speaks in terms of causation, not animus. An employer violates the ADA whenever it discharges an employee "on the basis of disability" (a necessary requirement for liability), not only when it harbors ill will (a sufficient way of establishing liability). Imagine a company that fired a visually impaired employee to save itself the minimal expense of buying special software for her. Without more, that would constitute termination "on the basis of disability," even if all of the evidence showed that cost-savings, not animus towards the blind, motivated the company.

For additional discussion of this case: Denial of a Reasonable Accommodation of a Disability is Disability Discrimination.

Robert L. Abell
www.RobertAbellLaw.com

Failure to Provide a Reasonable Accomodation is Direct Evidence of Disability Discrimination

Once an employee with a disability covered by the Americans With Disabilities Act (ADA) requests a reasonable accommodation for that disability the employer has a duty to explore the nature of the employee's limitations, if and how those limitations affected his or her work, and determine what types of accommodations could be made. The employer and employee have a duty to in good faith discuss what sort of reasonable situation -- one that addresses fairly the problem(s) caused by the employee's disability -- can be worked out. An illustration of this process and the consequences for an employer that ignores this duty is found in the recent Sixth Circuit decision, EEOC v. Dolgencorp LLC. 

Linda Atkins, the employee, was diabetic, and she'd had some hypoglycemic episodes that had twice caused her hospitalization. She was also a good employee for Dolgencorp LLC, which we know as Dollar General store. Atkins had found orange juice was an effective response to ward off a hypoglycemic event - it acted quickly and was easy to measure. She adopted the practice of keeping some orange juice in a personal cooler in the store's breakroom.

Atkins was sometimes obliged to work alone in the store. In these instances and where there were  customers in the store, Atkins could not retreat to the breakroom and drink orange juice when he felt a hypoglycemic episode coming on. She asked her store manager if she could keep some orange juice at the register at the front of the store and was told that company policy forbade it.

So Atkins was stuck between a rock and a hard place: she couldn't go back to the breakroom and get to her orange juice, and the employer had said she couldn't keep the orange juice near her work station at the front of the store. Put in ADA terms, Atkins had requested a reasonable accommodation for her disability -- that she keep some orange juice accessible at the front of the store to ward off any hypoglycemic event and the employer had refused, citing policy.

Dollar General having refused a reasonable accommodation, Atkins was twice forced -- in instances where she sensed the onset of a hypoglycemic event -- to take and drink a bottle of orange juice from the store cooler, paying for it in full afterward. She reported these instances to her store manager.

A "shrinkage" investigation triggered Atkins' firing. Investigators interviewed Atkins, and she volunteered to them the two instances where she had taken, consumed and then paid for the orange juice in emergency situations. But these investigators could only see things in one way: they concluded Atkins had violated Dollar General's "grazing policy," which forbids employees from consuming merchandise in the store before paying for it, and so they fired Atkins.

A jury found for Atkins and awarded her $27,565 in back pay and $250,000 in compensatory damages. Dollar General appealed.

Dollar General's principal argument on appeal was that "it had a legitimate, nondiscriminatory reason for firing Atkins, namely the company anti-grazing policy." The argument amounts to this: we had a policy that applied to everyone and any employee that violated it would be fired, regardless of whether they had a disability or not; hence, it follows, Atkins' disability was not a factor in her firing. Nonsense, the Sixth Circuit concluded, and explained as follows:

But a company may not illegitimately deny an employee a reasonable accommodation to a general policy and use that same policy as a neutral basis for firing him. Imagine a school that lacked an elevator to accommodate a teacher with mobility problems. It could not refuse to assign him classrooms on the first floor, then turn around and fire him for being late to class after he took too long to climb the stairs between periods. In the same way, Atkins never would had had a reason to buy the store's orange juice during a medical emergency if Dollar General had allowed her to keep her own orange juice at the register or worked with her to find another solution.

A defendant may use a legitimate, nondiscriminatory rationale as a shield against indirect or circumstantial evidence of discrimination. But a neutral policy if of no moment when an employee presents direct evidence of discrimination. And failing to provide a protected employee a reasonable accommodation constitutes direct evidence of discrimination. Hence "failure to consider the possibility of reasonable accommodation for known disabilities, if it leads to discharge for performance inadequacies resulting from the disabilities, amounts to a discharge solely because of the disabilities.

The bottom line: Denial of a Reasonable Accommodation of a Disability is Disability Discrimination.

Robert L. Abell
www.RobertAbellLaw.com

Race Discrimination Verdict Against UPS Upheld by Kentucky Court of Appeals

A blockbuster race discrimination verdict against UPS was upheld by the Kentucky Court of Appeals last week, UPS v. Barber.  The appeals court affirmed entirely the jury's verdict and the circuit judge's rulings. 

The case was brought by a group of eight African-American men, who were all employed by UPS as "feeder drivers," which means that they drove tractor-trailers between hubs. Between 2006 and 2012 these drivers made "multiple complaints to UPS management about ongoing racial hostilities at the Lexington hub." Grievance meetings were held in 2009, 2011 and 2012 at which issues "raised included the use of racial slurs, epithets and cartoons, and the meting out of severe or unwarranted discipline based on race." A variety of retaliatory and punitive actions were taken against the drivers, while the evidence at trial showed no substantive response by UPS that led to any improvement for the issues. 

A jury, after an eight day trial, awarded the drivers a total of $5,310,314.96 with the individual awards ranging from $100,000 to just over $1.5 million. 

The most notable of the Court of Appeals rulings regarded the trial court's admission of evidence "introduced to show incidents of racial animus were brought to UPS's attention during meetings with UPS managers in 2009, 2011 and 2012." This evidence was correctly admitted as the Court of Appeals explained:

[The evidence] tended to undermine UPS's defense that it exercised reasonable care to prevent harassment and take corrective action when necessary. Further, this evidence showed a pattern and practice of adverse treatment, racial hostility, discrimination and retaliation - a purpose approved by our Supreme Court.

Robert L. Abell
www.RobertAbellLaw.com

Pregnancy Discrimination in the American Workplace; A Rampant Problem the New York Times Finds

"Throughout the American workplace, pregnancy discrimination remains widespread." This the New York Times concludes in an excellent analysis: Pregnancy Discrimination Is Rampant Inside America's Biggest Companies.

There are legal protections and remedies under both federal and Kentucky state law. A reasonable person can ask how effective they are if the problem they aim to eliminate is and remains widespread. The conclusion is obvious: not good enough.

This employment discrimination lawyer says the best solution is found in better laws that offer greater remedies. What I'm talking about is real damages: when companies pay through the nose, they may change their conduct, more or less like individuals do.

And so it goes.

Robert L. Abell
www.RobertAbellLaw.com

 

Telecommuting Is Reasonable Accommodation for Lawyer, Sixth Circuit Rules

One would have thought that telecommuting as a reasonable accommodation for an employee's disability was a dead letter following the Sixth Circuit's en banc decision in EEOC v. Ford, 782 F.3d 753 (6th Cir. 2015). Not so as shown by the Court's recent and surprising decision in Mosby-Meacham v. Memphis Light, Gas & Water Div.

Andrea Mosby-Meacham began working as an in-house staff attorney for the defendant utility company in 2005; she dealt mainly with employment law issues. In January 2013, Mosby-Meacham developed pregnancy complications that resulted in surgery and being placed on "modified bed rest" for ten weeks, a restriction applicable to "prolonged standing or sitting and from lifting heavy objects." She made an official request for an accommodation for this condition, that "she be permitted to work from a bed either within the hospital or within her home for ten weeks." Her request was denied, although she represented that she could perform her job's essential functions with the requested accommodation. For unexplained reasons, it took the company an additional two weeks to formally notify Mosby-Meacham that her request was denied, by which time she had been working for three weeks while on "modified bed rest" and "no one from MLG&W ever told her to stop working during this time." Mosby-Meacham twice appealed unsuccessfully the denial of her accommodation request, before returning to work after ten weeks on April 1, 2013. She then worked right "up until her baby was born on April 14, 2013." 

Mosby-Meacham filed suit, and a jury awarded her $92,000 on her claim of disability discrimination. The trial court, U.S. District Judge John Thomas Fowlkes, Jr., then granted her equitable relief of $18,184.32 in back pay and reinstatement of her leave benefits that she had used during the ten weeks' bed rest. 

The employer's principal argument on appeal was that the jury verdict should be set aside, because Mosby-Meacham could not perform her job's essential functions while telecommuting, that her in-person presence in the office was required. This argument failed for the following reasons:

• several MLG&W employees as well as outside counsel who worked with Mosby-Meacham testified that they felt she could perform all essential functions during the 10-week period working from home
• although trying cases in court was listed as an essential function, Mosby-Meacham had never tried a case
• similarly, although taking depositions was listed as an essential function, Mosby-Meacham had never tried a case
• the job description the employer relied on was outdated and did not take into account the technological advances that had changed how Moseby-Meacham did her job
• the employer did not truly engage in an interactive process with Mosby-Meacham and instead invoked a no telecommuting policy even before considering her request

It appears that the employer overestimated the reach of EEOC v Ford, believing that the Sixth Circuit would never endorse telecommuting as a reasonable accommodation, because Mosby-Meacham presented a compelling plaintiff. She had actually telecommuted a few years prior with no problem; even in the time period relevant to this case, she telecommuted for apparently about a month with the employer raising no issue and instead reaping the benefit of her work. When her bed rest was over, she returned to work and worked right up until the birth of her child, an admirable move given that she'd had three prior miscarriages. It probably also helped that she was a lawyer since it made the panel more confident that it understood her job and less concerned about injecting into the workplace in a field and job about which they knew little. Finally, Mosby-Meacham benefitted from a perceptive trial court judge who recognized the limits of EEOC v Ford's reach and did not grant the employer's motion for summary judgment, which many district judges would have done. Credit goes to Mosby-Meachem's lawyers who did a fine job themselves.

Robert L. Abell
www.RobertAbellLaw.com

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The Cat's Paw; Proximate Cause and the Kentucky Civil Rights Act

For reasons beyond explaining employment discrimination law has incorporated the "cat's paw doctrine" to dress up what is a proximate cause analysis. The "cat's paw doctrine" appeared in the Court of Appeals recent decision, Lindsey v. Bd. of Trustees of the University of Kentucky.

Tonya Lindsey, an African-American woman, began working in healthcare for UK in 1990. She claimed that she was passed over for a promotion on three separate occasions on account of her race and gender. She later added a retaliation claim as well, one arising, as Lindsey pleaded her complaint, from the actions of her supervisor, Lisa Turner. Turner actually became Lindsey's supervisor after Lindsey had filed the discrimination suit.

The Fayette Circuit Court granted a summary judgment to the defendants, a decision that appeared to leave Lindsey's case in the shallows at best. Turner, a couple of months later, filed a cross-claim against UK and claimed, among other things, that "she was pressured by her superiors to closely scrutinize Lindsey so that Lindsey could be fired" and that he succumbed to this pressure out of fear for her own job. This caused the circuit court to vacate the summary judgment. To shorten the story, Turner later dismissed her cross-claim, and the circuit court granted summary judgment again to the defendants and this time on all claims.

The Court of Appeals reversed as to the retaliation claim, and invoked the "cat's paw" in so doing. Turner had not known of Lindsey's discrimination suit, but her assertion that she had been directed to dig up dirt, so to speak, on Lindsey and her further assertion that she feared for her job if she did not do so created a fact issue as to whether Turner was simply the unwitting and proximate cause of an unlawful retaliatory intent by the higher-ups at UK. The Court explained as follows:

This is known as the "cat's paw" theory of liability. A plaintiff alleging liability under the cat's paw theory seeks "to hold his employer liable for the animus of a supervisor who was not charged with making the ultimate employment decision." Thus, even if Turner herself lacked discriminatory intent, UK many nonetheless be liable if Turner's decision to recommend Lindsey's termination was caused by one of its agents acting with a discriminatory intent.

Lindsey was represented by the now-late William C. Jacobs. Bill Jacobs was one of Kentucky's great lawyers; he represented the plaintiff in the landmark Kentucky sexual harassment case, Meyers v. Chapman Printing, 840 S.W.2d 814 (Ky. 1992), and represented the plaintiff in a case that changed the way public library systems are funded in Kentucky, LFUCG v. Hayse, 684 S.W.3d 301 (Ky. App. 1984).

Robert L. Abell
www.RobertAbellLaw.com

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